EC Tax Rev Formula One

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Articles
Formula One. The race to find a common
formula to apportion the EU tax base
Joann Martens Weiner*
1. Introducing formulary apportionment
into the EU
After years of work, the European Commission is on
the verge of proposing a new direction in company
taxation in the European Union. This new direction
has two components. The first component is a
common consolidated corporate tax base (CCCTB)
at the EU level. The CCCTB is the driving force behind
the EU's tax reform efforts. The second component is
the apportionment formula, which has generally been
treated as a secondary issue in the EU's company tax
reform process.1
The Commission has made significant progress in
defining a common EU tax base. Yet it remains
relatively distant from defining a common EU
apportionment formula. With the Commission having
promised to release in 2008 a legislative proposal on
introducing an optional common consolidated corpo-
rate tax base into the European Union, it is time for the
Commission to specify how it will distribute the
common EU tax base to the Member States for
taxation at local rates.
Formulary apportionment is a compelling solu-
tion.2 Continuing to use separate accounting and
arm's length pricing to determine the amount of
income earned in each of the EU Member States would
largely negate the benefits of achieving a common tax
base.3 Although the Commission's company tax study
left open this possibility, it never appeared to take the
option of remaining with the separate accounting
system seriously.4 The Commission also considered
distributing the tax base using macro-economic
factors, such as national income, or industry factors,
such as industry average profitability, but it discarded
these options relatively early in the process.
The possibility of distributing the tax base accord-
ing to value added generated considerable interest
initially, partly because it was an innovative, although
untested, approach to distributing income and partly
because it was not associated with the formulary
apportionment method used in the US states and
Canadian provinces. Yet, that method also was
discarded, largely because when measured on an
origin basis it introduced the transfer pricing problems
and when measured on a destination basis it
introduced significant complexity. Moreover, when
decomposed into its separate elements, it became clear
that the value added formula became effectively a tax
on labour (which makes up about three-quarters of
value added). Given the interests in creating an
`employment friendly' business tax system, EU politi-
cians would seem to be reluctant to introduce a
method that imposed such a heavy burden on labour.
This article examines the remaining option on the
table: formulary apportionment. It first describes the
theory behind formulary apportionment and discusses
the controversial issue over whether to consider sales
and intangible property in the formula. It then
discusses the use of game theory in choosing a formula
choice and applies this analysis to the situation facing
the European Union. A brief section concludes.
* George Washington University. This article was prepared for a
special edition of the EC Tax Review on the European
Commission's plans to propose adopting a common consoli-
dated tax base with formulary apportionment. I would like to
thank Jack Mintz for sharing his inspiration to apply game theory
to the EU company tax reform project and Richard Sansing,
Marcel GeÂrard, and Benjamin Miller for their comments on this
article. Any remaining errors are my own. The author may be
reached at jemweiner@comcast.net.
1
The Tax and Customs Unit of the European Commission has
been directing this project and it has made its working papers,
agendas, summaries, and contributions from interested parties
available on its website. See http://ec.europa.eu/taxation_cus-
toms/taxation/company_tax/common_tax_base/index_en.htm.
The Commission refers to formulary apportionment as a
`necessary but unavoidable consequence' of creating a consoli-
dated tax base at the EU level.
2
For a detailed examination of the main issues involved in
implementing formulary apportionment in the European Union,
see Joann Martens-Weiner, Company Tax Reform in the European
Union. Guidance from the US States and Canadian Provinces on
Implementing Formulary Apportionment in the EU (New York,
Springer, 2006).
3
Formulary apportionment is the obvious answer, of course, only
once the decision has been made to move away from the
international arm's length separate entity accounting principle.
The arguments in favour of using formulary apportionment
within an economic union and the controversy over using
formulary apportionment on a worldwide basis are well-known.
See Michael C. Durst and Robert E. Culbertson, `Clearing Away
the Sand: Retrospective Methods and Prospective Documenta-
tion in Transfer Pricing Today,' Tax Law Review 2003, vol. 57, no.
1, pp. 37±136. For a counterpoint, see the Organization for
Economic Cooperation and Development, Transfer Pricing Guide-
lines for Multinational Enterprises and Tax Administrations (OECD,
Paris, 1995).
4
See Commission of the European Communities, Company
Taxation in the Internal Market (Luxembourg, 2001).
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2. The apportionment formula
A quarter-century ago, Peggy Musgrave analyzed the
principles behind the use of a formula based on the
location of a multi-jurisdictional firm's business
activity to divide the corporate income tax base across
jurisdictions.5 Although the US states had then used
this method for several decades, Musgrave explained
that the corporation income tax is a particularly
inappropriate tax instrument at the sub-national level,
especially within the context of a formulary apportion-
ment system. The combination of the different rates
and the apportionment formula creates, as Musgrave
said, àn uncertain and complex incidence pattern'.6
Because capital is highly mobile, the resulting alloca-
tion in the taxing area is inefficient as capital moves to
locations where it would not locate in the absence of
tax. Later empirical work by Weiner (1994) showed
that business investment is sensitive to these cross-
state variations in the effective apportionment tax rate
on capital.
Yet the US states have never considered giving up
the right to tax corporate income earned within their
borders.7 Likewise, within the European Union, the
Member States have always balked whenever the
European Commission has attempted to take over
competence for levying the corporate income tax or
even if the Commission has attempted to establish
rules for how they should design the corporate tax.8 In
essence, neither the US states nor the EU Member
States wish to cede the right to tax income earned
within their jurisdiction ± by both residents and non-
residents ± despite the theoretical arguments against
levying sub-national capital taxes.
Given the importance of the corporate income tax
in the EU Member States, the European Commission
has focused its attention on designing the mechanism
to distribute the EU-level tax base to the Member
States for taxation at local rates. Following Musgrave's
analysis, the Commission is attempting to design a
formula that leads to an outcome that is non-
discriminatory and that achieves ìnter-jurisdictional'
equity. Reaching these goals, as explained below, is a
formidable task.
The Commission has listed four broad principles
that should apply to any sharing mechanism.9 The
formula should be simple to apply and easy to audit; it
should be difficult to manipulate; it should distribute
income in a fair and equitable manner; and it should
not lead to undesirable effects on tax competition. In
its remarks to the Commission, the Business Europe
Task Force stressed that the àpportionment key' must
minimize the tax incentives to shift factors while
recognizing that it must not simultaneously limit fair
tax competition.10
Since the Commission insists that all Member States
must adopt the same formula, the Commission may
find it very difficult to design a formula that meets all
four objectives in all 27 Member States.11 For example,
a formula that distributes the tax base according to the
location of tangible property might be relatively simple
to apply (compared with a formula that distributes
income according to the location of intangible
property, for example), but it might have undesirable
effects on tax competition (relative to a formula that
distributes income according to the location of sales,
for example). A formula that distributes income
according to physical property may distribute income
to the factors that generate income, but such a
property has adverse effects on tax competition.
Whether a particular formula leads to a fair income
distribution, of course, requires making a subjective
judgment. Similarly, a formula that is composed of
elements that have third-party reporting, such as
worker compensation, is harder to manipulate than
one that does not have third-party reporting. Yet, this
formula places a relatively heavy burden on labour,
and thus might discourage employment in that state.
The Commission put forth a property, payroll, and
sales formula in its paper prepared for the December
2007 meeting of the CCCTB working group.12 The
Commission chose a multiple-factor formula so that it
would not be `too volatile' in the sense that the income
distribution would not be overly sensitive to the
location of one of the factors, and that a mix of factors
would better capture the income-generating factors as
well as help meet the varied interests of the Member
States.
The Commission presented a multiple-factor ap-
portionment formula that would include labour,
assets, and sales as a `promising approach' to share
the consolidated group tax base. The labour factor
would consist of equal weighted shares of payroll and
number of employees, the asset factor would not
5
See Peggy Musgrave, `Principles for Dividing the State Corporate
Tax Base,' in Charles E. McLure, Jr. (ed.), The State Corporation
Income Tax. Issues in Worldwide Unitary Combination (California,
Stanford University, Hoover Institution Press, 1984), pp. 228±
246.
6
Ibid., p. 229 referring to Charles E. McLure, Jr., `The Elusive
Incidence of the Corporation Income Tax: The State Case,' Public
Finance Quarterly 1981, vol. 9, no. 4, pp. 395±413; and Peter
Mieszkowski and John Morgan, `The National Effects of
Differential State Corporate Income Taxes on Multistate Cor-
porations,' in McLure, see n. 5 above, pp. 253±263. See Joann
Martens Weiner, Company Taxation for the European Community.
How Sub-National Tax Variation Affects Business Investment in the
United States and Canada, Harvard University Ph.D. dissertation
(1994, unpublished) for calculations of effective tax rates in the
states.
7
A number of states do not levy a corporate income tax, while
other states, such as Ohio, have decided to tax gross receipts
rather than income. Yet, in so doing, these states still assert the
right to levy an income tax. I am grateful to Ben Miller for
identifying the alternate taxes that the states may choose to levy
instead of an income tax.
8
For a history of these efforts, see the European Commission's
study.
9
See Commission of the European Commission, `CCCTB: possible
elements of a technical outline' (CCCTB/WP/057) and `CCCTB:
possible elements of a sharing mechanism' (CCCTB/WP/060),
both issued in November 2007.
10
The Business Europe comments are available on the Commission
website. See n. 1 above.
11
The Commission may propose a different formula for a specific
industry, such as financial services, but if it does so, then all the
Member States must also apply this common formula to that
specific industry.
12
See CCCTB/WP/060, n. 9 above.
EC TAX REVIEW 2008/3 101
FORMULA ONE. THE RACE TO FIND A COMMON FORMULA TO APPORTION THE EU TAX BASE

include intangible property, financial assets, or in-
ventory, and the sales factor would measure sales at
destination. The Commission did not establish
weights for each factor, other than noting that the
two elements of labour should have equal weights. It
considers the weights applied to each factor as a
technical matter for decision at the political level.
The Commission stressed that the formula must be
uniform across the Member States. Divergent formula
could arise in defining the formula for specific sectors
as long as those formulae also remained uniform
across the EU. The Commission also established that it
would apportion all income and not distinguish
between business and non-business income.13
The Commission has set forth an ambitious set of
goals, and the upshot of this discussion is that the
European Commission will have to compromise in
deciding how much importance it assigns to each of
its goals. For example, a formula that maximizes
income in one Member State is very likely to not be
the formula that maximizes income in all Member
States. Likewise, a formula that is not easy to
manipulate, may have undesirable competitive ef-
fects. The Commission may have to consider the
possibility of allowing the Member States more
leeway than it desires in defining the formula.
Moreover, the Commission will need to anticipate
that the importance of these objectives may change
over time and across the Member States.
2.1. Theory
Sovereign states assert the right to tax income earned
within their borders, but when companies earn
income in several states, determining the appropriate
principle for dividing that income across state borders
can be difficult.14 Using a formula based on where the
multi-state company does business is one method to
establish the source of the company's income.
Formulary apportionment assigns income to the
state where the factors that generate that income are
located. This method can follow one of two ap-
proaches. Taken from a supply perspective, capital and
labour are generally considered to be the factors that
generate income. Taken from a supply-demand
perspective, sales are also an income-generating factor.
Neither approach has a clear theoretical claim to
distributing income `better' than the other approach.
For example, in her analysis of the principles for
dividing the tax base across jurisdictions, Musgrave
(1984) concluded that `There seems to be no
straightforward economic basis for choosing between
the two or for assigning respective weights under the
supply-demand approach' (p. 234).
However, on practical terms, one formula may
dominate another. For example, Musgrave argued
that the formula should include sales if that
jurisdiction's entitlement to tax considered that
demand as well as supply created value. If jurisdic-
tions adopted this approach, then the appropriate
formula would double-weight the sales factor and
weight property and payroll by one-quarter each.15
Martens-Weiner recommends this formula for the
European Union on the basis that the corporate tax
base should be distributed to both the production
and the manufacturing base.16
Corporate tax incidence theory also suggests
including sales in the formula. For example, in
applying the theoretical conclusion that the apportion-
ment formula acts as a tax on whatever factors
included in the formula, McLure (1984) justifies
including sales on the basis that, in terms of incidence,
consumers and workers primarily bear the corporate
income tax, not capital owners.17 More recently,
Gentry reviewed recent empirical evidence on corpo-
rate income tax incidence in the open economy and
concluded that these studies show that labour, and
not capital owners, may bear a substantial burden of
the corporate income tax.18
Although the Commission advocates a formula that
includes destination-based sales, its CCCTB working
group has reached an impasse in finding an acceptable
apportionment formula. The majority of Member
States and EU business representatives generally agree
with the Commission's proposal to include property
and payroll factors in the formula. As discussed below,
both groups object to including sales in the formula.
In a compromise effort, the groups insist that if the
formula includes sales, then they must be measured
on an origin basis.
Thus, the Commission faces a formidable task in
finding a common formula to apportion the EU tax
base.
2.2. Should the formula include a sales factor?
Although there is some disagreement about the use of
the number of employees, the greatest disagreement
arises over the sales factor. Members of the EU
business community, EU Member States and experts
from the United States who participated in the
December working group expressed divergent views
about the sales factor.19 The Commission noted that
`the most controversial issue was whether a `sales'
13
Many US states allocate non-business income to specific states
and use a formula to apportion business income across the
states. This distinction has arisen primarily due to state-specific
concerns that are not necessarily applicable in the European
Union.
14
The Article refers to states, rather than jurisdictions, provinces, or
Member States, for ease of exposition.
15
Musgrave cautions, however, that determining the location of
sales is difficult. Although it is easy to determine the location of a
sale when a company makes the final sale to an external
consumer, it is considerably more difficult to determine the
location of the final sale when the company makes a sale to an
intermediate company that transforms
16
See Martens-Weiner, n. 2 above.
17
See Charles E. McLure, Jr., `Comments on Musgrave' in Charles
E. McLure, Jr. (ed.), The State Corporation Income Tax. Issues in
Worldwide Unitary Combination (California, Stanford University
Press, 1984), pp. 250±252.
18
See William M. Gentry, `A Review of the Evidence on the
Incidence of the Corporate Income Tax,' OTA Paper 101, US
Department of the Treasury, December 2007.
19
The European Commission has posted a list of the participants in
this meeting on its website. See n. 1 above.

factor should be included at all in the formula due to
its conceptual and practical difficulties'.20
In their remarks to the CCCTB meeting, the US
experts indicated that they advocated a multiple-factor
formula and indicated that the formula should include
a sales factor. However, the group was undecided
whether to measure sales at destination or, if it would
help reach agreement, to measure them at origin.
Recent academic papers published by European
economists also favour including sales in the appor-
tionment formula, essentially on the ground that
destination-based sales are relatively immobile.21 The
Commission has indicated that it views destination-
based sales as less mobile than sales by origin since the
company cannot control where its customers are
located. It also views a sales by origin factor as
duplicating the property and payroll factors.
By contrast, the EU business community opposes
including a sales factor in the formula, especially if the
factor measures sales on a destination basis. EU
businesses oppose the sales factor for several reasons.
First, if applied on a destination basis, the sales factor
would attribute income to the consumption, rather
than the production state, which is an allocation that
the business group argued would `impose a significant
shift from the current principle of attributing the
ultimate taxing rights to the source state' as estab-
lished in the OECD's work on international taxation.22
The EU business community is also concerned that
because the location of the final sale is not fixed, the
Member State tax authorities will impose harsh anti-
abuse rules if the location of sales influences the
income allocation. The group cites as an example the
possibility that a company might contract with an
independent sales agent to conduct sales in the
relevant market, thus shifting sales from the `intended'
state to the chosen state. The EU business group
argued that not only would these tax-planning
opportunities undermine the legitimacy of the sales
factor, but also they would likely trigger complex anti-
avoidance rules. In addition, the EU business com-
munity believed a destination-based sales factor could
be easily manipulated, and would, therefore, run
counter to the desire to create a formula that is stable
and not easily manipulated.
The US experts, some of whom were state tax
officials, did not agree with the EU business view. They
argued that a company would not as a matter of
business judgment give up control over distribution
solely for a tax advantage. They also indicated that
consolidating the related entities takes care of the
apportionment issue so that to the extent third parties
are used for distribution purposes the ultimate
consumer would be reflected in the apportionment
factor of the distribution company.
Finally, although theory may not indicate whether
sales should be included in the formula, practice
shows that the apportionment formula does include a
sales factor. Although there may sound arguments
against including the sales factor in the formula, in
practice, the two major locations that have adopted
formulary apportionment, the US and Canada, include
sales in the apportionment formula.
The US states long ago began using a multiple-
factor apportionment formula that includes property,
payroll, and sales measured on a destination basis, and
the early formulae imposed a relatively heavy weight
on the property factor (some of the first apportion-
ment formulae included only a property factor). But,
in response to competitive pressures, they have moved
away from the equally-weighted three-factor formula
that a state advisory group developed in 1957 and
have gravitated towards a more heavily weighted sales
factor.23 Many states have arrived to the point of using
a sales-factor only apportionment formula. The US
states have never adopted the two-factor property and
payroll formula recommended by a US Congressional
committee in the 1960s.24 The table below shows the
various formulae the states use to apportion corporate
income as of 2008.
The Canadian provinces have a very different
experience. When designing their apportionment
system from scratch in 1947, the federal government,
along with the provinces, chose a two-factor payroll
and sales formula. The provinces entered into agree-
ments with the federal government to apply the
common formula and the common federal tax base
in exchange for the federal government agreeing to
incur the collection costs for the corporate income tax.
The provinces have remained with that common
formula (and common base) for more than 50 years.
Perry (1989) attributes this consistency to the fact that
although the allocation rules might have been fairly
arbitrary when introduced, the fact that the provinces
have followed them for so many years makes it
20
See European Commission, CCCTB: Possible elements of the
sharing mechanism, CCCTB/WP0/60.
21
See Marcel GeÂrard, `Reforming the taxation of multijurisdictional
enterprises in Europe: a tentative appraisal', European Economy,
Economic Papers of the DG Economy and Finance, EU
Commission (2006), p. 265 and Marcel GeÂrard, `Reforming the
Taxation of Multijurisdictional Enterprises in Europe', CESifo
Economic Studies 2007, vol. 53, pp. 329±361 and Nadine Riedl
and Marco Runkel, `Company Tax Reform with a Water's Edge',
Journal of Public Economics 2007, vol. 91, pp. 1533±1554.
22
This argument is based on the continued use of the permanent
establishment notion in determining whether a company has a
sufficient taxable presence in a jurisdiction. The US states are
finding it increasingly difficult to ignore that the use of intangible
property in a state generates income, just as the use of tangible
property in a state generates income. Yet, the traditional view is
that a taxpayer must have a physical presence in a state before it
has created a taxable connection.
23
The formula is contained in the Uniform Division of Income for
Tax Purposes Act (UDITPA). UDITPA fests for rules for dividing
income of manufacturing and merchandising entities into
business income, which is apportioned using the equally-
weighted property, payroll, and sales formula, and non-business
income, which is allocated to specific states. UDITPAS also
defines the apportionment factors.
24
In 1977, all but one state used the three-factor formula; with its
single-factor sales formula, Iowa was the exception. A US
Supreme Court ruling in 1978 upholding the Iowa formula led
the way for states to move away from the three-factor formula
and 18 states use or are planning to use a 100 per cent sales
factor formula. See Moorman Mfg. Co. v Bair, 437 US 267 (1978).

Table 1 US state apportionment formulae, 2008
Apportionment formula States
Equal-weight (property, Alabama, Alaska, Delaware,
payroll, sales are District of Columbia, Hawaii,
weighted 1/3 each) Kansas, Montana, North
Dakota
Equal-weight or hybrid Missouri (firms choose either
equal weight or single factor
sales), Oklahoma (firms meet-
ing certain investment criteria
can choose double-weight
sales, otherwise equal-weight)
Double-weight sales Arkansas, California,
(property 25%, payroll Connecticut, Florida, Idaho,
25%, sales 50%) Louisiana, Maine, Maryland,
Massachusetts, New Hamp-
shire, New Jersey, New
Mexico, North Carolina,
Rhode Island, Tennessee,
Utah, Vermont, Virginia, West
Virginia
Triple-weight sales Indiana, Ohio, Pennsylvania
(property 20%, payroll
20%, sales 60%)
Super-weight sales (weights Arizona (15-15-70), Michigan
given for property, (3.75-3.75-92.5), Minnesota
payroll, sales factors) (11-11-78)
Single-factor sales Georgia, Illinois, Iowa,
Kentucky, Louisiana,
Nebraska, New York, Oregon,
Wisconsin
Other hybrids Colorado, firms choose
between three-factor even-
weighted and a two-factor
sales and property formula;
Mississippi, retailers, whole-
sales, service companies,
lessors use single-factor sales,
wholesale manufacturers use
even-weight three factor, retail
manufacturers use three-
factor double-weighted sales.
No general corporate Nevada, South Dakota, Texas
income tax (gross receipts tax),
Washington, and Wyoming
Source: Federation of Tax Administrators.
difficult for any province to abandon the uniform
rules.25
Although some provinces have broken out of the
federal agreement, Mintz (2004) makes the same point
that even though these provinces could establish their
own allocation formula, they have chosen to remain
with the uniform federal allocation formula.26 Mintz
also recognizes that even though some provinces
would now like to modify the formula, the nature of
the negotiations over the formula as a zero-sum game
prevents the provinces from deviating from the
existing formula. The Canadian experience, therefore,
shows that once a formula is chosen, even if it is not
`ideal' over time, that there are great benefits to
cooperate in maintaining that formula for purposes
of creating certainty and stable expectations.
The European Commission faces a conundrum in
deciding whether to include sales in the apportion-
ment formula. On the one hand, the US states and
Canadian provinces include sales in their apportion-
ment mechanism and, therefore, provide a real-world
example of the formula that sub-national jurisdictions
have chosen to use. The US states provide an example
of a non-cooperative situation where, when given the
choice, many states choose to apportion all income
according to the location of sales.
On the other hand, the EU Member States and the
EU business community, none of which has ever
applied an apportionment formula within the Eur-
opean Union, firmly oppose incorporating a sales
factor in the apportionment formula. Thus, it appears
that `practice' may deviate from `theory' regarding the
sales factor.27 The European Commission may wish to
consider whether the political and economic structure
of the EU, which is composed of sovereign national
governments with years of experience in administering
a corporate income tax, may explain why the Member
State tax authorities and the EU business community
reject the destination-based sales factor.
2.3. Should the formula include intangible property?
In addition to the debate over the sales factor, the EU
Member States and EU businesses have not yet
determined whether to include intangible property in
the formula. As with the sales factor, there are
arguments for and against including some measure
of intangible property in the formula.
Intangible property presents a particular dilemma
in the apportionment mechanism. By its very nature,
intangible property and intangible income are neither
easily measured nor easily located. Yet, intangible
property is an increasingly important element in a
multinational firm's business. As the BusinessEurope
task force noted, given the high value of intangible
assets and the high level of income they generate, the
Commission should undertake a `thorough impact
analysis' before deciding to exclude them from the
property factor.
The Commission has considered whether to
include intangible property according to the present
25
See J. Harvey Perry, `A Fiscal History of Canada ± The Postwar
Years', Canadian Tax Paper (Canadian Tax Foundation, 1989),
no. 85.
26
There are minor deviations from the formula and tax base. The
provinces set their own investment tax credits and tax rates. See
Jack Mintz, `Corporate Tax Harmonization in Europe: It's All
About Compliance', International Tax and Public Finance 2004,
vol. 11, pp. 221±234.
27
One dilemma that arises is in this area is that some analysts
advocate a destination-based sales formula with no other factors
on the argument that the company cannot manipulate the
location of consumption. Perhaps the difference arises from the
different legal rules concerning where a sale takes place (i.e. at
title passage, free on board, delivered at frontier, etc.). I am
grateful to Ben Miller for highlighting the importance of this
dilemma.

discounted value of income flow the property
generates measured, for example, by the value of
royalties paid for its use.28 Others have suggested
measuring intangible property according to the
expenses incurred for developing the intangible
property.
Because intangible property and income are so
mobile, the Commission is concerned that multi-
national companies could easily manipulate its loca-
tion and thus violate one of the key principles of the
sharing mechanism ± that it not be susceptible to
manipulation. Many US states that do not apply the
ùnitary' concept (which is similar to consolidation)
face a situation where multi-state companies engage in
a tax planning strategy that allows them to shift
intangible income to their operations located in a
favourable tax location. They accomplish this income
shifting by transferring their intangible property to
their controlled out-of-state passive investment com-
pany (PIC) that is located in a tax favourable state. The
PIC then licenses the intangible property back to the
operating company, which makes tax-deductible
royalties for the right to use the intangible property.
As a result, the operating company receives a tax
deduction and the PIC pays little or no income tax on
the royalty income.
The states address this potentially abusive situation
either by considering that the presence of intangible
property in the state creates a taxable presence in the
state for the out-of-state company, or by treating the
entire company as a unitary business. Under the
unitary business principle, the state treats the holding
company as an integrated unitary entity with the
operating company and transactions between the
operating and the holding company are eliminated
as internal transactions. Thus, the location of income
becomes irrelevant, in a sense.
Although many states consider that the `presence'
of intangible property in a state creates a taxable
connection with that state, the international commu-
nity does not generally reach this conclusion. That
community still relies on the physical presence
standard of a permanent establishment, as contained
in the OECD Model Convention and the worldwide
network of bilateral income tax treaties, to determine
whether a non-resident entity has established a
sufficient connection with the state to be subject to
tax.29 By taxing on a consolidated basis, the Commis-
sion will address the PIC issue that some states face, at
least with respect to transactions within the European
Union.
Despite the difficulties created by intangible prop-
erty, the Commission has noted, however, that
excluding intangible property from the apportionment
factor might be very unsatisfactory for the European
Union since doing so would ignore an important
income-generating asset for multinational companies.
Yet, including intangible property introduces complex
problems concerning their value and location. As
McLure (1997) explained in his paper prepared for
the US Treasury conference in 1996 dealing with the
possible implementation of formulary apportionment
at the international level, determining the location and
the value of intangible assets is likely to lead to an
ànalysis similar to that under the separate accounting
standard'.30 Therefore, it is not likely to reduce the
complexity that is so problematic in the current
separate entity accounting with arm's length pricing
standard.
One other point should be made. Excluding
intangible property from the apportionment formula
does not mean that intangible income is not taken into
consideration. If the formula does not contain an
intangible factor then the income generated from
those intangibles will be distributed according to the
location of the more easily measurable factors. In
many ways, this outcome is the most sensible outcome
if intangible income is considered to be attributed to
the entire company, not to a particular location.
2.4. An alternate formula
As the above discussion shows, the Commission
appears to be at an impasse over whether to include
sales or intangibles in the formula. To exit from this
impasse, the Commission may wish to consider the
benefits and drawbacks of the following modified
three-factor formula.31
As the Commission has already suggested, it can
meet the interests of the newer EU Member States by
dividing the payroll factor into two elements ± one
that is based on the number of employees and one that
is based on the amount of compensation. Each of
these elements would be weighted by one-sixth.
Following this line of thinking, the property factor
could also be divided in half. One share could be the
ratio of tangible property to total property and the
other share could be the ratio of intangible property to
total intangible property.
Similarly, the sales factor could be divided in half.
One share could be the ratio of sales at origin to all
sales at origin and the other share could be the ratio of
sales at destination to all sales at destination.
This multiple-factor formula achieves several objec-
tives that the two or three-factor formulae fail to
achieve. First, by incorporating six elements, no single
element is `too' vulnerable to factor shifting. Second,
by incorporating intangible property, it addresses the
28
See Ana Agundez-Garcia, `The delineation and apportionment of
an EU consolidated tax base for multi-jurisdictional corporate
income taxation: A review of issues and options,' Working Paper
No. 9, October 2006.
29
The permanent establishment Article is not identical within the
treaty network, with some countries establishing a relatively low
threshold and other countries establishing a relatively high
threshold. These differences are especially pronounced in
comparing treaties with developed and those with developing
countries.
30
See Charles E. McLure, Jr., ÙS Federal Use of Formula
Apportionment to Tax Income from Intangibles,' Tax Notes, 11
March 1997.
31
I put forth this formula as a suggested way to stimulate
discussion over issues that may arise when the formula includes
sales and intangible property, not because I recommend the EU
adopt this formula. I have long advocated that the EU adopt a
formula that double-weights sales and applies a one-quarter
weight to property and payroll formula.

issue that intangibles now make up a significant
element of many multinationals. Third, by incorporat-
ing a sales factor, it recognizes the role of demand in
generating profits. By measuring one element on a
destination basis, it recognizes that the role of a market
state may be separate from the manufacturing state.32
Although the above formula addresses the concerns
of those who believe that the apportionment formula
should include sales and intangible property, the
formula also introduces significant complications over
how to value and locate intangibles and where to
assign final sales that appear to have led the EU
stakeholders to be cautious about including these
factors in the apportionment formula. In considering
the advantages of adopting a formula similar to the
one suggested above, the European Commission and
the Member States may wish to consider whether the
benefits of introducing a sales and an intangible factor
outweigh their costs.
3. An application of game theory
In recent work with Jack Mintz, we explored how
game theory may help to evaluate the process by
which the EU may reach agreement on a formula for
distributing the EU tax base.33 This article closely
follows that analysis, but it modifies the game to focus
on the choice of the apportionment formula.
The EU's negotiations over the apportionment
formula can be viewed as a game among the 27 EU
Member States, which are choosing their strategies to
maximize their payoffs that would result if the
members reached an agreement.34 In determining
the strategy and irrespective of whether players
cooperate in this process, each player takes into
consideration the other players' set of incentives. The
process is simultaneous; and, the game will reach
equilibrium when each government's chosen strategy
represents the best response to every other govern-
ment's strategy. Ultimately, the game will reach a
stable, or Nash, equilibrium. A Nash equilibrium
occurs when none of the players has an incentive to
choose another strategy given the strategies that other
players have chosen. An equilibrium strategy becomes
stable since each participant has no incentive to
deviate from its chosen strategy. If, however, a player
can improve its position after learning the position of
another player, then the resulting outcome is not a
Nash equilibrium.
One important insight from game theory ± whether
players cooperate or not ± is that each player
understands the other player's point of view and takes
those views into account when designing a strategy.
Another important insight is that an equilibrium may
not exist, and that multiple equilibrium outcomes may
exist.
The variety of apportionment formulae in the US
states illustrates this possibility. Although many states
have adopted a super-weighted sales formula, other
states have remained with the three-factor formula. In
terms of game theory, the fact that not all states choose
the same formula may result, in part, from the different
industrial make up of the state and the possibility that
optimal strategies may change.35 For example, a state
with numerous capital-intensive industries might
prefer a different formula from a state that his
numerous high-tech industries.
In addition, a state may choose a revenue maximiz-
ing strategy at one time, and an investment promoting
strategy at another time. These strategies imply a
different formula, thus confirming that multiple out-
comes are possible. In the EU context, the possibility
that the Member States may not converge on the same
formula indicates that there may be no single
apportionment formula that each player would choose
as its optimal formula. In fact, since the amount of
revenue that each Member State obtains from the
corporate tax changes each year suggests that the
revenue-maximizing formula also changes each year.
Sheffrin and Fulcher performed such an experi-
ment on the US states using a two-factor sales and
payroll formula and allowed each state to choose the
formula that maximized the amount of income
apportioned to the state. They found that over a
three-year period, one-third of the states would have
had to change their formula to continue to meet its
revenue maximizing strategy. The revenue maximizing
formula also depended on the industrial composition
of the states, with states that were dominated by
labour-intensive industries preferring a different for-
mula from states dominated by merchandising in-
dustries. States with a well-balanced industrial mix
showed less dispersion over the formulae than states
with a less balanced industrial mix.36
32
Richard Sansing provided the following helpful example. One
way of comparing separate accounting with formulary apportion-
ment is with the following example.
I make a widget for 7 in Poland and sell it for 11 in Germany.
All of my workers and property are in Poland. Under separate
accounting, the income of 4 from this transaction depends on the
transfer price.
A 100 per cent sales factor apportionment formula is
equivalent to a transfer price of 7; an apportionment formula
with 0 per cent weight on sales is equivalent to a transfer price of
11; a 50±50 weighting on sales and input factors is equivalent to
a transfer price of 9.
See the working paper by Sansing and Anja De Waegenaere,
`Transfer pricing, formulary apportionment, and productive
efficiency', which makes this point. I am grateful to Richard
Sansing for providing this example.
33
See Jack Mintz and Joann M. Weiner, `Some Open Negotiation
Issues Involving a Common Consolidated Corporate Tax Base in
the European Union', paper presented at the NYU University of
Connecticut Law School EC Tax Policy symposium, 14 March
2008, and forthcoming in Tax Law Review.
34
This discussion follows Jack Mintz and Richard Bird, `Sharing the
International Tax Base in a Changing World, Essays in Honour
of Richard Musgrave', Public Finance and Public Policy in the New
Century (MIT Press, 2003), pp. 405±446.
35
Some states adopt a super-weighted sales formula after a
neighboring or competing state adopts that type of formula,
suggesting that the situation was not a Nash equilibrium because
the optimal strategy changed once the other state revealed its
strategy.
36
See Steven M. Sheffrin and Jack Fulcher, `Alternative Divisions of
the Tax Base: How Much is at Stake,' in Charles E. McLure, Jr.
(ed.), The State Corporation Income Tax. Issues in Worldwide
Unitary Combination (California, Stanford University, Hoover
Institution Press, 1984), pp. 192±216.

The analysis assumes that it is plausible for member
states to reach equilibrium and come to an agreement
on a common apportionment formula. For govern-
ments, then, the payoffs are a combination of
revenues, economic efficiency gains and distributive
impacts that accrue to each Member State as part of the
agreement (with the tradeoffs varying across Member
States according to their particular situation). Govern-
ments have incomplete information, meaning that
while players in this situation are aware of the game's
participants, some factors of the game are not common
knowledge, e.g. the relative importance of business
activity or income shifting to or from the state.
The negotiations over the formula may be viewed as
a cooperative game where the Member States are
negotiating a binding agreement for dividing up the
joint payoffs (a binding agreement is not necessary to
achieve cooperation, and cooperation may be impos-
sible if there are too many players).37 Although some
players have more information than others, as long as
the players are credible and the information has a
positive effect, players generally benefit from commu-
nicating with one another since they can increase their
joint payoffs relative to the outcome they would
achieve under a non-cooperative game.
The following features characterize a cooperative
game:
. Pareto-optimality: The joint payoff should be taken
from a set of payoffs that achieves the highest level
of payoff for the coalition of all players in the game.
Pareto-optimal payoffs are those in which no other
player can be made better off without making some
player worse off.
. Coalition-stability: Some players may participate in a
coalition and exclude non-cooperative players if the
coalition is in their interest. The equilibrium of a
cooperative game comprises outcomes that are
stable within the coalition in the sense that the
subset of non-participants can block any other
outcome.
. Individual rationality: The players must reach a
binding agreement that makes each player at least
as well off as it would be in a situation where the
players cannot reach agreement. The game must be
`individually rational,' meaning that each player
does better than the player would achieve if it did
not cooperate.
. Side-payments: Negotiation of side-payments may
lead to cooperation. Side-payments (transferable
utility) expand the possible outcomes for coopera-
tion (the core of a game). Without side-payments,
cooperation is more difficult to achieve.
Each of the above features can be applied in the
context of the EU Member States agreeing on a
common apportionment formula.38 For example, in
discussing potential EU apportionment formulae, if
the Member States care solely about revenues in the
sense that each Member State must collect at least as
much revenue under the new system as it does under
the current system (a pareto optimality condition),
then the Member States have suggested that the
formula must maintain the current revenue alloca-
tion.39 This condition implies that even if all other
Member States are made better off under the new
system, if one Member State is projected to collect less
revenue under the current system, then under the
pareto optimality criterion, the solution must be
rejected.
For the tax base to increase in all of the Member
States, then the proposed common consolidated EU
tax base must be larger than the sum of the individual
tax bases. However, because the CCCTB will allow
cross-border loss offsetting, the EU Member States are
not convinced that the CCCTB could be larger than
the sum of the national tax bases.
Yet, it is entirely possible that the CCCTB will be
larger than the sum of the individual Member State tax
bases. A CCCTB that eliminated tax preferences and,
thus, broadened the tax base could very well grant
each Member State a larger piece of the pie than it has
at present. In fact, the European Union Member States
and the European Commission appear implicitly to
anticipate this outcome by presenting the new method
as improving the investment allocation across the EU
and, thus, the EU's economic efficiency.
In terms of coalition stability, the availability of
`enhanced cooperation' among a subset of at least one-
third of the Member States illustrates one way to reach
a stable coalition. There are some restrictions with this
coalition; under the terms of the EU Treaty, the
coalition may not exclude other members from
joining. This coalition will also need to introduce
anti-abuse measures to protect its tax base against
factor and income shifting to the non-participating EU
Member States.
In terms of individual rationality, each Member
State must perceive that it benefits from the chosen
formula, whether determined by tax revenue or by
improved competitiveness. If revenue is the concern,
this criterion means that Luxembourg, for example,
would need to collect roughly 16 per cent of its total
revenues from the corporate income tax, while
Germany would need to collect just 3 per cent of
total revenues.
Finally, the EU is familiar with the notion of side-
payments, as it has long offered trade-offs to Member
States to obtain their agreement on EU-wide propo-
sals. The `rebate' granted to the United Kingdom and
the state aid granted to Ireland are examples of how
the Commission makes facilitating side payments to
reach an agreement. With the CCCTB, however, the
Commission strictly rejects the notion that it will allow
Member States to make such deviations from the
37
See GeÂrard, n. 21 above.
38
In commenting on the article, Marcel GeÂrard indicated that he is
not as optimistic as I am, noting that much depends on the
formula and on the initial distribution of the apportionment
factors. See GeÂrard, n. 21 above for details.
39
It will be extremely difficult, and likely impossible, to attain the
revenue maximization goal, given the sharp tax rate reductions in
many Member States over time. Maximizing the tax base share
may be a better objective than maximizing tax revenue. Even
with this strategy, however, the `maximizing' formula is not likely
to be the same in 2010 as in 2008.

common apportionment formula (and common con-
solidated tax base) merely for the purposes of reaching
an agreement.
Without an agreement, the EU Member States
engage in a non-cooperative tax policy game. In a non-
cooperative game, governments take independent
fiscal actions regarding the national level and mix of
public goods, services and taxes. In non-cooperative
games, governments are usually assumed to be first
movers and they anticipate the reactions of the private
sector to their fiscal decisions.
The essence of the results from non-cooperative
models is that governments will generally make non-
optimal choices. In this case, they will choose
apportionment factors that lead to inefficient invest-
ment allocation relative to a coordinated solution,
depending upon the nature of `fiscal externalities'
present.
Fiscal externalities are the effects that one govern-
ment's decision has on the welfare of other govern-
ments. In some cases, fiscal externalities are positive,
leading the other country to benefit from the first
government's choice. Such an outcome could occur if
a jurisdiction applied a relatively heavy weight on
assets (property) in the apportionment formula so that
investment moved out of the country. On the other
hand, a fiscal externality may be negative so that the
chosen formula diverts investment from the other
jurisdiction.
Within the US, the states compete with their
apportionment formulae, usually by increasing the
weight on the sales factor to encourage additional
business investment in the state or to attract mobile
capital to the state.40 Such ìnvestment flight' leads to
tax base èrosion' in the low sales factor weight
country and to tax base èxplosion' in the high sales
factor weight country.
Table 2 below illustrates the incentives for the
Member States to alter the weight on the property
factor in the apportionment formula. As shown below,
governments have an incentive to reduce the weights
on the property factor to attempt to reduce the
apportionment tax rate and the effective tax rate on
capital and, thus, maximize the attractiveness of the
state for investment.41 The apportionment tax rate is
the product of the tax rate and the weight on capital
while the effective tax rate is the marginal tax rate
under apportionment and depends on the distribution
of capital across all locations.
Suppose that the EU is considering apportioning
income solely on the basis of the location of capital
(which is an option that some have proposed). This
formula leads to an apportionment tax rate equal to
the statutory tax rate and to an effective tax rate that is
a function of the distribution of capital and the local
tax rate. Thus, a country, such as Belgium, with a high
tax rate will have a relatively high marginal tax rate.
Germany, which has both a high tax rate and a large
share of EU capital, has the highest effective tax rate in
the European Union.
Germany, viewing this relatively high effective tax
rate may consider proposing a formula that weights
capital by just one-quarter (and, to be equitable,
applies a one-quarter weight to payroll and, thus, a
one-half weight to sales). Germany benefits from this
new formula because its apportionment tax rate,
which is the product of its tax rate and its share of
capital falls. All other countries are affected as well.
Due to the nature of the apportionment process, the
tax rate in any jurisdiction depends on the distribution
of property across all jurisdictions. Thus, as the share
of property increases in one area, it affects the
distribution of property in all other areas and,
consequently, the effective tax rates in those areas.
40
Note that because the sum of the weights must be less than or
equal to one, then an increase in the weight on the sales factor
implies a reduction in the weight on the other factors in the
formula. In practice, the states have weighted the property and
the payroll factors identically and reduced those weights by the
same amount when they have increased the weight on the sales
factor.
41
Other payoffs are possible. Anand and Sansing, see n. 32 above,
define state welfare as the sum of taxes collected, producer
surplus accruing to the states inhabitants, and consumer surplus
accruing to a state's residents. This analysis does not take into
account the different mobility of capital across the states. If
capital is relatively fixed, then a state may prefer to maintain a
relatively high weight on capital.
Table 2. Calculations of EU apportionment tax rates
under different capital factor weights
Weight on capital = 1 Weight on capital = 1
¤4
EU Apportion- Effective Apportion- Effective
Member ment tax tax rate ment tax tax rate
State rate rate
(1) (2) (3) (4)
Austria 34% 2.60% 8.5% 0.65%
Belgium 34 6.80 8.5 1.70
Czech Rep. 28 ±3.83 7.0 ±0.95
Denmark 30 ±1.69 7.5 ±0.42
Estonia 26 ±6.15 6.5 ±1.53
Finland 29 ±2.86 7.25 ±0.71
France 35 6.75 8.75 1.68
Germany 38 9.28 9.5 2.32
Greece 35 3.00 8.75 0.75
Hungary 16 ±15.97 4.0 ±3.99
Ireland 12.5 ±29.69 3.13 ±7.42
Italy 33 2.32 8.25 0.58
Latvia 15 ±17.16 3.75 ±4.29
Lithuania 15 ±17.16 3.75 ±4.29
Netherlands 30 10.07 8.63 2.51
Poland 19 ±12.92 4.75 ±3.23
Portugal 27.5 ±4.19 6.88 ±1.04
Slovakia 19 ±13.13 4.75 ±3.28
Slovenia 25 ±7.13 6.25 ±1.78
Spain 35 4.78 8.75 1.19
Sweden 28 ±3.45 7.0 ±0.86
UK 30 2.09 7.5 0.52
Average 27 ±3.98 6.80 ±1.00
Note: The tax rates are calculated according to the
distribution of foreign direct investment across the member
states. FDI data are not available for Cyprus, Luxembourg,
and Malta so the table does not include these countries.
For details, see Table 13 in Joann Martens-Weiner, Company
Tax Reform in the European Union (New York, Springer, 2006).

A one-quarter weight on capital, however, may not
be an equilibrium weight for the capital factor in the
EU because each player has an incentive to reduce
further the weight on capital to attempt to make its
state relatively more attractive to investment. For this
reason, many analysts of US state apportionment
strategies suggest that a zero weight on capital (or a
100 per cent weight on sales) is the inevitable
outcome if states may freely vary their apportionment
formulae.
Some outcomes may be stable for a subset of
countries, depending on the relative mobility of
capital. Several studies on the effects of changes in
the US formulae show possible outcomes. For
example, Anand and Sansing (2000) show that states
will choose a formula that represents the relative
mobility of the factors in their state so that states
dominated by immobile natural resources may prefer
to maintain a relatively high weight on capital.42 Thus,
states that have relatively fixed factors, such as natural
resources, will remain with the Massachusetts formula
while those with relatively mobile factors will move
toward a sales-based formula. Edmiston enhanced this
work by showing how a state `strategically reacts' to a
policy change in a neighbouring state. Thus, if a
neighbouring state increases the weight on the
destination-based sales factor then that state may
believe that it must also move to such a formula to
remain an attractive location for business investment.
Since the destination-based sales factor tends to
reduce the tax burden on in-state business activity at
the expense of out-of-state sales, many states view this
super-weighted sales formula as an effective develop-
ment too, although the empirical evidence on the
successfulness of this strategy is inconclusive.43
Omer and Shelley find that sub-national competi-
tion for mobile business capital, employment and sales
leads state government to engage in an apportionment
competition with other states.44 Weiner found a
statistically insignificant impact on business invest-
ment in states that reduced the weight on the property
factor.45
In terms of game theory, state actions show that
many of them attempt to move to a formula that they
perceive to be in their best interest. However, although
an individual state might improve its position by
moving to a particular formula, once other states adopt
that formula, the first-moving state loses its advantage.
In the end, all states would have been better off if no
state had attempted to gain a strategic advantage. In
particular, the US states would be better off under any
common formula than with differing formulae. The
fact that the Canadian system has generated such
minimal controversy by comparison with the states
seems to confirm this point.46
This outcome illustrates a case of a `prisoner's
dilemma' where each player in pursuing its own self-
interest makes everyone worse off than if they had not
pursued their own self-interests. Avoiding this out-
come requires that the players enter into a binding
commitment. The European Commission can assist
the Member States reach this binding agreement
through making side payments that guide the
members toward a cooperative agreement that may
not be possible without the side payments.
Maintaining a cooperative agreement may be
difficult, however, given the demonstrated desire for
fiscal sovereignty in the Member States. The EU
Member States wield considerably more independent
power than their counterparts in the US states and
Canadian provinces.
To give an example of a difficulty that the EU
Commission may face in maintaining a binding
commitment, consider a situation in North Carolina.47
To encourage a company to expand its manufacturing
in the state, the North Carolina Tax Review Board
allowed the company to reduce the weights on its
property and payroll factors during the `start-up phase'
of its new production facility and to then reduce the
weight on the property factor for subsequent years.
Suppose that an EU Member State approached the
EU Commission and requested such an àlternative'
formula. Would the Commission have the ability to
deny the request? What if the Member State in
question was suffering an isolated economic shock
and appeared to deserve special treatment? By what
criteria would the Commission determine that the
special treatment was no longer necessary?
The European Commission has also suggested that
EU multinational companies should have the right to
request an alternate apportionment formula in cases
where the statutory apportionment formula does not
fairly represent income earned in a Member States.
This èscape clause' could prove to be very problematic
for the Commission's attempts to create a uniform
apportionment formula, as requests to use alternative
apportionment methods may overwhelm Member
State tax authorities.
By one estimate from North Carolina, which has
recently modified its procedures, the state received up
to 30 requests each year to use an alternate
apportionment formula. Although the notion of
providing an escape clause is attractive, as it will allow
the tax authorities to provide relief in cases where the
statutory formula leads to a result that is all out of
proportion to the business activity conducted in the
42
See Bharat, Anand and Richard Sansing, `The weighting game:
formula apportionment as an instrument of public policy',
National Tax Journal 2000, vol. 53, no. 2, pp. 183±99.
43
See Kelly Edmiston, `Strategic Apportionment of the State
Corporate Income Tax', National Tax Journal 2002, vol. 55, no.
2, pp. 239±262.
44
See Thomas Omer and Marjorie K. Shelley, `Competitive,
Political, and Economic Factors Influencing State Tax Policy
Changes', Journal of the American Taxation Association 2004, vol.
26, Supplement.
45
See chapter 4 in Joann Martens Weiner, n. 6 above.
46
The fact that there are two studies of the Canadian system, one in
1994 by Joann Martens Weiner (see n. 6 above) and one by Jack
Mintz and Michael Smart, Ìncome shifting, investment, and tax
competition: Theory ad evidence from provincial taxation in
Canada', Journal of Public Economics 2004, vol. 88 suggests that
the common formula has minimized the deviations in policy that
are necessary to conduct fruitful empirical research.
47
See Philip Morris USA Inc., v E. Norris Tolson, Secty of Rev. of
the State of North Carolina, North Carolina Court of Appeals, 7
March 2006, No. CA05-340.

state. However, it may also lead to less defensible
actions in the Member States who may wish to use
deviations from the EU apportionment formula to lure
investment from other Member States. The EU's
business code of conduct could be modified to
prevent such actions, but it may encounter political
obstacles along the way.
4. Concluding remarks
In many ways, by reaching broad agreement on a
CCCTB with formulary apportionment, the European
Commission has already overcome the greatest
obstacles to achieving company tax reform in the EU
and primarily `technical' issues remain to be solved.
Yet, if the European Commission fails at devising a
formula that will distribute income in a manner that all
EU Member States can accept, it will fail to reach the
goal of introducing its system.
The analysis here has asserted that the EU can
apply the principles of game theory to determine
where the equilibrium among the Member States lies.
It is too early to determine whether that formula will
include sales and intangible property or not. How-
ever, the analysis here suggests that the EU Commis-
sion would profit from taking into consideration the
strategies of certain influential Member States to
determine a formula that would maximize their
individual payoffs and then attempt to devise a
system that may include side-payments that will lead
the Member States to reach a cooperative outcome.
Given the EU Commission's role as taking the EU
interests as a whole into account, it is in the best
position to guide the Member States away from a non-
cooperative outcome and towards a stable equili-
brium.

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EC Tax Review
For over a decade, tax professionals in Europe and elsewhere have relied on EC Tax Review
for up-to-date coverage of developments in EC tax law and practice. Published quarterly, EC
Tax Review provides tax practitioners, consultants, accountants, academics, business finance
directors, and pubic officials with comprehensive information about European taxation. The
Review is only available to Intertax subscribers.
EC Tax Review offers the following features:
. Six issues a year exclusively dedicated to European Community (EU) tax
developments, the harmonization of taxation in the EU, and the implementations
of EC tax laws into national legislation
. Detailed coverage of direct tax, indirect tax, and social security from the legal as well
the economic angle
. A selective time-saving reference source of cases of the European Court of Justice and
relevant national EC tax cases
. Unbiased coverage of major developments
. A valuable reference source for tax-related literature in the various EU countries
. A board of editors of high standing to ensure consistency and quality
. Expert correspondents from the various individual EU countries and from within the
EU in Brussels; and
. Comprehensive sections comprising Editorial, Articles, Book Reviews, Case Law,
Legislation, and Recent Publications.
The quality, timeliness, and diversity of its articles make EC Tax Review an appealing and
informative information source on European taxation.
Editor-in-Chief: B.J. Kiekebeld
Editors: F. Vanistendael (Chairman); P. Elliott; A. Cordewener; L.G.M. Stevens; H.P.A.M.
van Arendonk; A.J. RaÈ dler; C. Garbarino; M. Aujean and E.C.C.M. Kemmeren.
Associate Editors: Correspondents: Austria: M. Jann; Belgium: C. Docclo & F. Vanistendael;
Finland: J. Juusela; France: D. Berlin & O. Delattre; Germany: G. Scholten & M. Lamm;
Greece: C. Finokaliotis; Ireland: M. Walsh; Italy: A. Fantozzi, M. Magenta, F. Nanetti & M.
Lombardi; Luxembourg: A. Elvinger & J.P. Winandy; The Netherlands: D.M. Weber;
Portugal: M. Pires, A. Dourado & S. Vasques; Spain: F.A. GarcõÂa Prats; Sweden: J.
Bjuvberg; UK: P. Elliott & D. Oliver; Commission: D. Raponi & D. Schelpe; Court of
Justice: C. Docclo.
For more information about EC Tax Review, please visit
www.kluwerlawonline.com/ectaxreview

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